Fresh Cup Magazine

Specialty Delivery
Putting a Priority on Mail-order Coffee & Tea
By Sarah Allen

Kim Wallace could've kicked herself. When she decided to leave San Francisco to start graduate school in Oregon, she anticipated missing her family, her friends and her big-city life. She resolved to hole up in an unfussy apartment and earn an advanced degree. She saw a future spent with her laptop at the library. But soon enough, she realized she forgot something-something quite major.

Kim forgot the coffee. She realized it just as she finished moving in the last boxes, sitting five hundred miles north of her former life amidst packing material and syllabi, and she briefly considered just saying, "forget about this." Because the kind of coffee Kim likes is only roasted in one retail shop in San Francisco. To Kim, there is no other coffee. She sees herself not as a coffee extremist but, rather, a coffee realist. She has found what she likes and so she has stuck with it. "Either the shop burns down or I fall down dead," she says. "End of story."

Kim's plight began in 1998, just a few years ago, but eons back by measure of the maturity of the mail-order coffee and tea business. For the first few months of school, friends and family came to visit and brought with them pound bags of Kim's favorite Ethiopia Harrar. When she went home for the winter holiday, she came back with five pounds and sadly stored them away knowing they wouldn't taste nearly as good when she got around to brewing them as they would have fresh off the roast. Kim was in a serious bind.

   It was late at night, deep in the heart of a stormy February, when she was placing an order online for research material and the thought occurred to her: What if she could buy that coffee online? What a dream, she chuckled, and dismissed the idea. But the next morning she woke up and called the shop to suggest her idea. And that was when Kim felt she could have kicked herself: Henry's House of Coffee in San Francisco had offered mail-order coffee all along. For Kim, the problem was solved.

   But for coffee roasting and tea professionals, the mail-order business can be nothing short of maddening. Amazon.com essentially coined the anything-by-mail mantra, and specialty beverage devotees depend on the service for a variety of reasons. Perhaps they live a great distance from a reputable roastery, or maybe they just like the convenience. And Kim's story is not a new one: She wanted the coffee she had grown to love. But there's another side to her story: Homesick in a new place and wanting something familiar, what would be more comforting than a steaming mug of coffee sent straight from the old neighborhood?

   "With an ever-broadening base of people depending on home-delivery for all kinds of goods, there is even more pressure on mail-order coffee to keep up with the competition," says Kevin Keeler, freelance coffee business consultant and owner of Montana Maid Coffee in Helena, Montana. "So many roasters have mail-order and e-commerce operations; now it's just a matter of whose is best, which is to say, whose stands out in terms of quality, character and convenience."

   But teeming as the market for mail-order coffee and tea may be, there are still plenty of curious roasters wondering whether the foray would be right for their business. How much would it cost? If their clientele were community-based, how would they market the expansion to folks outside of their immediate vicinity? As the path to mail-order success has in many ways already been successfully forged, how could they possibly hope to stand out from the masses? What about companies who want to deal only in mail-order sales and forgo a retail front? And in our increasingly Internet-driven lives, how could small coffee and tea companies harness the Web to work in their favor rather than have it complicate their business?

Preparing to Lick the Stamp
In some ways, starting a mail-order business as an off-shoot of a retail operation is easier than beginning with mail-order alone. A coffee shop or teahouse will have already established a name for itself and built up a loyal following. For example, Barrington Coffee Roasting Company in Great Barrington, Mass., operates both as a retailer and a mail-order dealer. And while Marketing Director Tricia Widgen emphasizes that mail-order can be financially rewarding, she says that in most cases, it is also incredibly labor-intensive. "Mail-order is profitable, but it is much more work than the wholesale side," she says. "It has proven to be an important form of supplemental income to our wholesale business. The mail-order business also assists in developing the wholesale side and vice-versa. It keeps us in homes and helps us receive real feedback on our coffee and our business tactics." But keep in mind the rigor, she says, noting, "It takes as much time and effort to fill a one-pound order as it does to fill a 100-pound order."

   On the other hand, meet Todd and Esther Cowen, owners of the two-year-old mail-order-only business, Story House Coffee. Though the Cowens originally planned to operate as a retailer first and a mail-order business second, they're enjoying the success of their company. "Mail-order has lived up to my expectations," says Todd Cowen. "We are actually ahead of what I predicted our growth curve would be, so I'm pretty happy." In meditating on the advantages and drawbacks of retail versus mail-order, Cowen weighs in with some of both. "The main plus is that you get a little more flexibility in your schedule. Somebody has to be there to answer the phones at regular hours, but you don't have to open the shop at 5 a.m. for the commuters," he says. "The downside to the Internet is that it never goes away. You can go home, but all those night-owl customers are still there filling your e-mail box with hundreds of questions about your coffee. This makes it hard to stop working because we can take our business wherever we go. If you have a laptop, you're at work. So what started as an idea we hoped would free us from the long hours of a café, sometimes ends up being more demanding because you never lock the door for the night."

Setting Up Shop
For many specialty coffee roasters and tea businesses, production is commenced on a fairly low-intensity level and, strangely enough, oftentimes by accident. "Business can be launched on a small scale fairly easily," says Martha Hailey, owner of Teatime With Kit in Los Angeles, who recalls her own mail-order venture beginning simply with her East Coast family members wanting a taste of Hailey's teas back home. "Beginning a mail-order business should be something you do because you've heard from your customers how they wish you would deliver by mail. In L.A., a lot of people-the wealthier ones, in particular-don't want the extra hassle of having to drive all the way to my shop for a two-week supply of tea," she says. "When I first started hearing that, I checked with some shipping companies about package deals. There are ways to accommodate small orders, large orders and everything in between."

   Future mail-order coffee and tea businesses should consider the fact that they will be investing in packing and packaging materials and, likely, Website design and upkeep. As a business establishes itself, owners may want to contemplate publishing a catalog-and these don't necessarily have to echo the full-color glossy brochures the big guys use. Many customers are charmed by handmade leaflets. But the resounding warning from those already established in the mail-order business is all about, well, the mailing part of it.

   Depending on how big you want your mail-order business to grow, investing in bulk packing materials is a consideration. A start-up supply-i.e. enough to get a company through the first month and long enough for them to gauge initial business traffic-for a small operation would cost about $1000, says Hailey, who advises contacting several packaging and postal services in your area to compare service and materials pricing. She also suggests inquiring about package deals. "Some mail-order supply outfits have special pricing plans for businesses operating on various levels," says Hailey. "For example, if you have a fairly consistent amount of outgoing coffees and teas on a weekly or monthly basis, you may be able to strike a deal based on that reliability."

   Barrington started its mail-order business small in 1994, shipping a few requests in any manner possible, then making a professional mail-order debut in 1995. Since then, the company's mail-order outfit has thrived. "The mail-order business has continually grown since 1995 and even more rapidly in the past couple of years due to the Internet and brand awareness," says Widgen. "Our most difficult tasks to date were selecting a shipper/delivery carrier and a sales software solution. After trial and error and market research, we settled on UPS for all of our wholesale and residential shipping. Building a relationship with UPS has been an important part of our customer service."

   Indeed, many mail-order operators cite shipping complications as the most frustrating and prevalent problem in their business. The National Coffee Association of the U.S.A. recently completed the new NCA Standard Traffic Documents in XML format, a newer, more advanced programming language than HTML, and the files are available for download on the association's Website, www.ncausa.org. The four documents are "Shipping Advice," "Sample Order," "Delivery Order," and "Invoice." "Creation of standard trade document XMLs is the first essential step in connecting the global coffee industry in real time," says Robert Nelson, NCA president and CEO. "Availability of such XML standards will ultimately allow industry participants to communicate electronically, facilitating automated data retention and reporting.

   To be sure, the more serious a roaster becomes about mail-order coffee, the more sense it makes to go electronic with the business and incorporate supply software into your production. But heed the advice of those who have already survived the trenches. "Computerizing and automating our process has enabled us to work with very few employees, but small mistakes in the code on our Web page or in in-house software can be costly if they're not caught quickly," says Todd Cowen. Cowen recalls a nightmarish experience due to a mis-billing, which occurred because of a random bug in the computer system he built. "A couple of people were really angry, and it wasn't much fun to make the phone calls apologizing and offering free coffee and a refund to make up for the mistake," he says.

   Further, Cowen recommends being aggressive and shopping around when it comes to finding a trustworthy, reasonably priced shipping company. "The largest unforeseen issue we've faced is that our product's appeal is affected by the ups-and-downs of the shipping industry," he says. "Shipping is a large percentage of the cost for most online coffee purchases, and it's basically out of our control. As sales increase, if we want to make our roasting more efficient, we can always buy a bigger roaster or purchase more automated packing machines, but if our shipping carriers raise their prices significantly, there's nothing we can do. Esther and I are stuck holding the bag when customers call to complain. It's made us be very aggressive in negotiating our deals with shipping companies, and it also forces us to spend a lot of time examining our packaging and shaving off extra ounces or making the containers more efficient."

Enter: The Internet
Regardless of the fact that a mail-order business can never truly hang a "Closed" sign, Sandy Young of Heavenly Hawaiian Farm: The Other Farm, in Holualoa, Hawaii, can't help but feel elated when she checks her e-mail each morning and finds her inbox stuffed. Sure, it's a sign of much unending work, but it also signals success.

   "Businesses in the coffee industry should definitely market their products and services on the Internet," writes Internet business consultant, Eric Schiff, in the industry manual, Achieving Success in Specialty Coffee, published by Bellissimo Coffee InfoGroup. "Opportunities to enhance, expand and tap new markets for their products and services are wide open. There are many advantages to integrating or even making the Internet the focal point of a business marketing plan. Businesses that sell coffee products and the myriad related items have huge potential for increased sales, and, ultimately, profits, by using this marketing medium."

   And where potential buyers may have shied from the perceived impersonal nature of the computer just a few years ago, the Internet is becoming more user-friendly all the time. Keeler thinks the Internet is actually very personable, and he reports that Montana Maid has seen a five-fold increase in Internet orders since the company began its mail-order operation four years ago. "Think of it this way: You are on a one-to-one relationship with an Internet buyer," he says. "At any given time of the day, an Internet buyer is logged on, surfing. There is one big difference between an Internet buyer and a store customer. You have 100 percent of the online customer's attention, without interruptions from other customers, employees, etc. In my consulting with new coffeehouses, I bring up this point."

   Holed up in her apartment working on her graduate thesis, Kim Wallace says it was actually easier to order online than it would have been to pick up the phone, not to mention visit a store. As a student, she wasn't much different than a working professional in that she spent more time on the computer during waking hours than she did anyplace else. "I'm already sitting in front of the computer when I'm checking things off my 'to do' list," she says. "I pay my bills online and complete projects online. Of course, I'm going to be more likely to buy my coffee online."

   Schiff concurs, saying, "People are growing less concerned about purchasing products via the Internet as the ordering and transaction processes on Websites become more refined, seamless and user-friendly. The advent of online shopping carts and inventory databases-including instant order processing and tracking-has made Internet commerce more viable. The fact that more and more businesses are selling their products over the Internet has increased consumer confidence and legitimized the activity."

   But as with any tool designed to bring in profits, implementation of your Internet business must be strong and lasting. Young, who attributes 98 percent of the Other Farm's sales to the Internet, says she concentrates heavily on promoting the company's logo to perpetuate customer recognition, and-more than anything else-customer service. "We have tried to keep our Website current, attractive and easy to operate," she says. "The first and foremost issue is to make it easy to place an order with the least amount of hassle."

   Keeler points out that responsiveness is also essential, noting that his company sends replies within 24 hours. "Most Internet buyers feel they have 'purchased' when they place their order," he says. "Reply with a personal message, just as you would if you were selling at your store." And Marc DeCaria, Internet sales manager for San Giorgio Coffee, a mail-order roasting company in Hollywood, Fla., remarks that considering the sophistication of today's Internet systems, they tend to be more reliable than the phone. "I try to get everyone to order online-not that I will not accept them over the phone. But we do like to make sure that every order is correct." Because San Giorgio roasts and flavors coffee to order, precision is critical and, he says, "Phone orders tend to get processed wrong or delayed."

Marketing Magic
Coffee entrepreneurs with limited funds who are considering mail-order in lieu of retail might initially think the plan sounds too good to be true. And they would be right. Sure, you're operating a business without the expense of a retail location, the complications of scheduling and the stress of staffing. But you're also a sight-unseen commodity. That is to say, a mail-order-only business has to do a whole lot more work to establish a client base, considering the fact that they can never invite those customers into any shop.

   By and large, mail-order business owners agree that the majority of their customers were referred by word of mouth. But how did that initial word get out there? Jacob Christianson, former owner of the mail-order-only business, Jake's Coffee, never advertised in any publication, but he did tap into various coffee lovers' databases. As he was already a coffee connoisseur, Christianson was associated with various online chat groups and clubs. He sent out free samples, passed a link to his Webpage along to members and sent out flyers. "This kind of grassroots operation has to start with putting out baby feelers," he says. "Enlist everyone you know. I sent out massive group e-mails and promised five dollars off the first order to anyone who responded from that list." Christianson opted not to send free samples of roasted beans to potential customers, worrying about the "freebie fanatics." Instead, he offered dollar-off coupons, sign-up-a-friend initiatives and frequent buyer club cards. And every time he got an address, he sent out a flyer and coupons. "With a plain-Jane name like Jake's Coffee, I had to get peoples' attention somehow."

   The Cowens, on the other hand, used their distinctive "story book" format to gain initial attention. Having originally planned to open a café, the couple ran into structural problems with the building they owned and ended up not being able to affordably retrofit it for their retail needs. "Unfortunately," Todd Cowen says, "we had already purchased and installed the roasting room in a separate building out back, so we were stuck with a half-completed project."

   But the Cowens turned the situation around, taking the unique, creative slant they originally intended to implement in a café setting and applying it to a mail-order venture. Initially, they planned to build a café around live storytelling entertainment. When they realized they would be financially unable to open a café, they instead attached the storytelling concept to their product packaging. It was a spur-of-the-moment decision that has become one of the most unique mail-order concepts around.

   Companies hoping to thrive as mail-order-only businesses should have something very unique about them to encourage customers to try them sight unseen, says Young, who has built a livelihood from the easy sell of exotic Kona coffee. But still, she must compete against other Kona farms. She credits the company's Internet presence, special offers and self-promotion to the Other Farm's success. "We always include a color brochure about our farm and a business card with orders we ship," says Young. "Our best publicity has been news releases (about award-winning beans). We include copies of our press releases with each first-time order."

A Parcel of Imagination
Coffee-crazed customers like Kim Wallace are bound to figure out that they can obtain their favorite beans by mail. But what about the customers seeking "a taste of San Francisco" in general? Plenty of roasters have the opportunity to play those cards right and offer a friendly product that reminds the customer of another place. Keeler, for example, has an account with Yellowstone National Park. People buy his coffees in the park's gift shops and then continue to order it on the Internet because they associate it with the great vacation their family had in Yellowstone. Just as specialty drinks should say something about the coffee that particular coffeehouse stands for, so should your coffee or tea have a point and purpose intrinsic to your business philosophy. Certainly using your immediate surroundings as a selling point can work, especially if you operate from a big city or a vacation destination. But the way the Cowens see it, creativity is the real name of the game.

   Realizing they would not be able to open the storytelling café they originally dreamed about, the Cowens decided to stick with the story idea in a mail-order operation. As fans of the written word themselves, they imagined it might be a draw to feature stories, poems, essays, and the like on the actual coffee packaging. Whimsically designed to showcase both the text and artwork, the coffee canisters feature different labels every week. Coffees are categorized as "Learned Beans," which feature nonfiction and poetry, "Enchanted Beans," for mysteries, fantasy and romance, as well as "Fancy Beans" (estate coffees), "Earthy Beans" (organic coffees), "Slow Beans" (decafs), and, simply, "Beans," for less-expensive coffee. Sound fun? That's what customers think now, judging by the success of the company. But like almost any dream, it took some fighting for to become a reality. "It was actually very hard to sell the idea in the beginning," says Todd Cowen. "A lot of people didn't get it-at least, not until they actually saw the cans. We used to say sometimes, 'Well, we're not making any money, but at least this week's Enchanted Beans story is hilarious.'"

   When it's done right and done well, the mail-order business can be just as lucrative for the small-batch roaster as for a big company, such as Peet's Coffee & Tea. But the crucial difference for smaller companies is often the level of creativity and originality they can incorporate. "Mail-order can be very profitable, but it's an extremely competitive business," says Todd Cowen. "There are a lot of companies out there with more money than we have. They have more experience, they have more market share and so it goes. Basically, we've tried to stick to our niche: great-tasting coffees and fun and interesting packaging."

Mapping Out a Mail-Order Future
Just about everyone involved in mail-order coffee and tea operations agrees that the delivery realm has endless profit possibilities. That's why so many people are jumping onboard this potentially lucrative bandwagon keeping in mind that creating a memorable presence is crucial. But Hailey considers this a blessing rather than a challenge. "It's much more difficult to maintain a personality when you have a giant company," she says. "I have never had to advertise, and my mail-order sales are booming. Why? Word of mouth. And word of mouth comes from great customer service. Even the pickiest of specialty tea and coffee connoisseurs appreciate a friendly, special message," she says. "Whether it's an e-mail response to an order or a hand-written 'Good to talk to you, Judy. Enjoy the coffee.' If at all possible, personal touches will make any mail-order business blossom."

Sarah Allen is the associate editor of Fresh Cup Magazine. She can be reached at 503/236-2587 or via e-mail at sarahallen@freshcup.com.